Egypt Opposition Vows to Overturn Islamist Constitution

Egyptian opposition leaders set the ground for renewed unrest with vows to revoke an Islamist-backed constitution that appears to have won a majority of votes in the most-populous Arab nation.

Supporters of President Mohamed Mursi, who pushed the charter to a vote ignoring opposition calls to delay the referendum, say the process is key to restoring order as the country struggles with a faltering economy, high unemployment and a flight of foreign capital. Mursi’s opponents, a mix of Christians, youth activists and secular groups, say the bill bolsters the influence of Islam in state affairs and fails to protect some freedoms.

Opposition groups “are committed to continuing our collective, peaceful struggle to bring down this constitution as soon as possible through legitimate means,” former presidential candidate Hamdeen Sabahi told reporters in Cairo yesterday. “We trust that the door of peaceful protests and peaceful civic resistance is open to Egyptians to topple this constitution.”

Unofficial results released after the Dec. 22 final stage of the referendum showed the charter passed with about 64 percent of votes in a turnout of about 33 percent, according to postings on the website of the Muslim Brotherhood, the country’s largest political organization. The elections committee is yet to say when it will announce the result.

Feeding Families

Farah el-Naggar, a 37-year-old maid and mother of three, didn’t vote even though she backed Mursi in the June presidential election.

“I live day by day, and each day, life gets harder,” el- Naggar said in an interview. “People like me don’t have time to think about constitutions any more. We need to feed our families. We need stability in this country, and all we’ve gotten are broken promises.”

The unrest since last year’s uprising that ousted Hosni Mubarak sent foreign reserves down by almost 60 percent below pre-revolt levels. A request for a $4.8 billion loan from the International Monetary Fund had been cited by officials as key to winning broader backing from international lenders, donors and restoring investor confidence. The government has asked the IMF for a delay. The country’s budget deficit increased 38 percent to 80.7 billion pounds ($13.1 billion) for the period between July and November 2012, compared with the year earlier, Finance Ministry figures show.

Costly Debt

The premium investors demand to hold Egyptian debt over similar-maturity U.S. securities has climbed 44 basis points, or 0.44 of a percentage point, to 452 since Mursi sparked the constitutional dispute Nov. 22 by granting himself extra powers.

The cost of protecting the country’s debt against default for five years surged to 490, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market. That ranks it among the world’s 10 riskiest borrowers, ahead of Iraq and Lebanon. Egypt’s benchmark EGX 30 Index fell 0.4 percent at 11:02 am after closed down 1.5 percent yesterday.

Mursi may temporarily transfer his legislative powers to the so far powerless upper house of parliament after the result of the vote is released, the state-run Al-Ahram reported, citing unidentified officials in the presidency. Mursi, who assumed the powers because the lower house had been disbanded earlier in the year by court order, has appointed 90 new members to the upper legislative chamber.

New Parliament

The move would mean the Islamist, who was fielded by the Brotherhood for the presidency, may be able to deflect some of the criticism he faced for holding legislative and executive powers. After the adoption of the charter, he is also expected to call for parliamentary elections that could offer Islamists a chance to recapture the solid majority they held in the dissolved legislature.

The vote indicates Islamists could do well in the run for parliament, according to Emad Mostaque, a London-based investment strategist at Noah Capital Markets.

“With the presidency, parliamentary and upper house majority and the army now onside, the fractured opposition will be unable to block any motions or major moves, with amendments to the constitution requiring a majority vote in parliament,” Mostaque said in an e-mailed note today.

Tax Increase

Before the vote on the charter, and amid clashes between Islamists and the opposition, Mursi’s government earlier this month suspended a decision on tax hikes after the move sparked broad outrage among the impoverished.

“We anticipate one of the first moves that will be made will be to pass the currently suspended taxation increases and subsidy cuts allowing the IMF and EU aid of over $10 billion to come through, stabilizing the economy,” Mostaque said.

Even so, the potential for unrest was reflected in the local media, with the independent Al-Masry Al-Youm’s headline today reading: “The Minority’s Constitution.” The sub-headline said that 11 million of the 51 million eligible voters cast “yes” votes.

Responding to claims of vote-rigging and other violations, Essam el-Erian, vice chairman of the Brotherhood’s Freedom and Justice Party, said “all accusations against the referendum process are untrue,” the state-run Middle East News Agency reported. He said the will of voters must be respected and called for a national dialogue to end divisions, it reported.

To contact the reporters on this story: Tarek El-Tablawy in Cairo at teltablawy@bloomberg.net; Mariam Fam in Cairo at mfam1@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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